Telecom Stocks Outlook For The Week - 25 to 29.09.2017

Telecom Stocks Outlook For The Week - 25 to 29.09.2017

Free Intraday Tips : Join Our Whatsapp No : 9841986753
Free Commodity Tips : Join our Whatsapp No : 9094047040

Telecom Stocks Outlook For The Week - 25 to 29.09.2017 )

The shares of most telecommunication companies are seen trading lower next week as long-term outlook for the sector remains weak after the Telecom Regulatory Authority of India cut interconnect usage charges to 6 paise a minute from 14 paise, dealing a severe blow to operators except Reliance Jio Infocomm Ltd. Interconnect usage charge is what an operator pays another for landing calls on the latter's network. The regulator on Tuesday announced that the new charges will be effective Oct 1. They will be scrapped from Jan 1, 2020. While Reliance Jio stands to gain significantly from the cut in the charges as it will lower costs for the new entrant, the move will hit the balance sheets of Bharti Airtel, Idea Cellular, and Vodafone India, which earn revenue due to incoming calls on their networks. We expect Reliance Jio to end up saving 45-60 bln rupees while CLSA expects estimates for the company's 2018-19 (Apr-Mar) earnings before interest, tax, depreciation and amortisation to rise 20% due to the cut. The cut will hit Bharti Airtel's and Idea Cellular's EBITDA by 4% and 7%, respectively. Seen falling; Mid-Caps to recoup Operators, who were already facing stress on their revenues after being forced to lower tariffs to match those offered by Reliance Jio, are likely to move court against TRAI's order. The debt laden sector is expected to see further pressure if the market experiences heavy demand for the much-hyped Reliance Jio's fourth generation mobile phone.
The telecom arm of the Reliance Industries Ltd has received 6 mln registrations for booking its phone and aims to start deliveries during Navratri. Meanwhile, the Telecom Commission has asked the inter ministerial panel set up to suggest steps to ease financial stress in the sector to "work out more options" to provide relief to companies. The report is awaited. Next week, shares of most telecommunication companies are seen weak.

Source : Cogencis Information Services Ltd.